I am a mediocre planner (I view my Father as the greatest planner), however, knowing that I am not that good at planning gives me a peculiar talent, in that, I can spot (easily) flaws in other folks plans. I think of myself as a “risk editor” for plans.

Plan and Then Revise

Let me explain, if a good planner looks at your plan, they will overlay their own fastidiousness onto your plan, and will assume you have “dotted all the I’s and crossed all the T’s”, which is a dangerous assumption for many plans. Most plans I have seen do not get down to most of the gritty details needed to make it an actual plan (e.g. Dates on which you will make deposits, pay bills, what you will do with found money), and that is where most of them fail.

For someone like me, who has failed at planning so many things in my life (not just financial things), I easily see these flaws in other folks’ plans, because I overlay my own shortcomings and just start asking questions about things (in a financial context):

Did you think about what would happen if you lost your job?

What if you or your wife had a catastrophic illness next week? How would your plan work?

Paying off your credit cards is here, but are you going to keep using those credit cards? You don’t seem to mention that in your plan.

What if interest rates suddenly jumped to 6% in 6 months? Can your plan withstand that kind of stress?

Are you being overly optimistic with your plans? Few of us plan realizing our own shortcomings.

Most folks really hate when I do this, because they answer me the same way my daughters did when I asked questions like, “Did you pack your runners?”, when going to an out-of-town basketball tourney. The answer is “YES, I DID!” (Read that with a snarky sarcastic tone), and then we get to the tourney, and the shoes (in fact) are still at home.

I am not telling you to find a bad financial planner and use their plan, what I am saying is create a financial plan, and then have someone you trust (or a real financial planner) review it to see if there are risks or details that you have overlooked. Different sets of eyes sometimes can see new things.

Once you have a plan, treat it as a living document, review, revise, and update

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This being the last day of the year, and it falling on a weekday, means you can try to sneak in one or two financial transactions for the calendar year 2015 (or any other year if you are reading it some other time). Is this a good day to be calling in to your banks call-in centre? Absolutely not! You will be on the phone for a very long time, I would suggest doing anything on-line, and if you cannot do that be very patient with the folks on the phones.

Good Bye 2015, I do so love Geek Humor

Fun things to get done on the last day of the year:

TFSA withdrawal, yup, you can take something out now, and then replace it some time next year (which would be tomorrow). Is this a good idea? No, especially if it is for impulse buying, but if you will need to, then I guess it is an OK idea (but I am not saying it is OK, just that it works).

RESP, TFSA, or RDSP deposit ? Not really, it is never a bad idea to put money in these saving vehicles but the limits tend to roll-over to the next year, so no point in wasting your time, unless, you have some left over cash that you got for Christmas, then maybe today is a good time to put that away in savings.

Withdraw lots of cash for a huge party tonight? C’mon guys, blowing huge wads of cash to celebrate the end of one year or the start of another year is just dumb.

Make your quarterly tax payment? If you are on a payment plan with the CRA, maybe it is time to get that done?

Stop by the Licensing bureau to renew your cars registration? Again, be patient, remember, this is your fault!

Got any old insurance claims you haven’t submitted? Might want to get those done too.

Here is a good one to do, make a charitable donation, this is the spirit of the season and you get a tax break in March.

You will have more TFSA room, so you should be able to deposit more money into yourTFSA. This year your can add $5500 more to it, and the sooner you put it in, the sooner it has a chance to grow as well.

If you are adding new funds to your TFSA and you are using a Couch Potato Index portfolio, or you have specific percentages by sector, now might be a good time to use these extra funds to bring the portfolio back into balance too.

Rebalance your portfolios might be a good idea overall, given the cogitations and undulations of the markets over the past little while, now is the time to “take profits” and “take advantage of good prices” if you will allow me those car salesman-ish type expressions.

Check over your current insurance coverage. You need to know when all your insurance comes due, how much you are paying, whether the rates have gone up and maybe write it all down (just in case). You don’t want to be searching for insurance coverage after a major incident. Now might be the time to start thinking about shopping around for better rates as well (before you are about to renew).

An excellent example is if you are turning 50 this year, now is the time to start shopping around for better term insurance rates, and maybe time to start thinking about disability insurance as well.

Note there is a handy life insurance quote tool on the right side of this —> give it a whirl.

Expecting a new child this year? Have one and haven’t started their RESP yet? Start now, in the name of Sky Rocketing Tuition rates, start now, or you are dooming your child to a huge student debt load (or you can not give a flying hoot and let them pay for it themselves, take your choice).

It’s RRSP time, how do I know? It’s a trick question, it is always RRSP time (and TFSA time for that matter). Before the insanity of February, go put some money in your RRSP now, and give it a month head start on growth.

How is that financial plan going? Now is the time to have a look at it, and see if you need to change it for this year, or just keep cruising along. It didn’t work for you at all last year? Time to start a new plan, try some new ideas, and see if they work better for you. You don’t have a plan? Excellent time to start a new financial plan (just like RRSP time, financial planning time is right now).

In Retrospective Neither of Us Knew the Dangers that lurked not too far behind us!

I think I agree with my overall verdict of Financial Planners who charge by the hour have a potential to be less driven by selling specific products, and more inclined to create a plan that fits the client (instead of making the client fit “The Plan”).

To refresh your memories, just after getting laid off I met with a Financial Planner, who was going to help me plan my Financial Future (which luckily went OK in spite of my own ideas).

Specifically he looked at:

He started by filling in some of the numbers he gave me about my yearly income, the size of the severance package, and the size of my pension pay out.

The variables to be dealt with are:

Do I take my severance package completely when it is made available?

Do I use the RRSP room I have now or later?

…

What are the implications of me withdrawing from the pension plan?

The advice “Bill” gave me was fine, and in hindsight there was a large amount of blind luck in some of these decisions (i.e. circumstances changed drastically during the time I was laid off until all my financial decisions were complete), I will elaborate here.

I take my severance package completely when it is made available?

“Bill” gave some very sound advice, that almost ended up being catastrophic (through no fault of his own). I was laid off at the start of August, so my “package” would only be paid out as of mid-October, however, I could defer payment into two parts if I wished. “Bill” advised to split the moneys so that I didn’t have a massive tax bill in the year I was laid off, and then take the rest on January 3rd of the next year.

This was good sound advice, however, Nortel declared bankruptcy on January 15th, and luckily they paid the second part of my severance, or I might have been left like many folks with nothing to show for it.

Grade on Advice: B but if he had said January 30th the grade would have been an F

Do I use the RRSP room I have now or later?

The advice given was use up all the RRSP room that I had to hide as much money as possible, which ended up being a good thing as well. I used most of the RRSP room in the year I was laid off to soften the tax blow on things, and I still have some of that money left, again good avice.

Grade on Advice :A

What are the implications of me withdrawing from the pension plan?

Initially “Bill” had very bad advice (in hindsight) because he said that I should leave my Pension with Nortel. He was quite insistent that Nortel’s pension plan was safe from Nortel’s imminent demise, but at the end of it he relented (a little) and said that I could take the money out and put it in a LIRA (and RRSP) if I wanted to, but he did say it would be smarter to stay in the Nortel Pension Plan.

Again, “Bill” couldn’t have known that the Nortel Pension Plan was going to unravel the way it did, but luckily Mrs. C8j and Michael James both advised strongly against keeping the money in anything with the word Nortel associated with it, and we did remove the money from the Nortel Pension Plan before it unraveled (as well).

Grade on Advice: D- I can’t give him an F, but he was way to insistent on staying in the plan for my liking, I could be in a bad financial place right now if I had followed that advice.

Overall

I think it was good to talk with someone about our Financial Situation, and I think “Bill” did an OK job, didn’t try to “sell” anything to me, and gave me some good ideas on how to live on my severance package. Yes, he almost cost me a great deal of money, but then again, can I blame him for not knowing about Nortel’s pension woes? Don’t know.